- India’s Supreme Court has set up an independent panel to investigate whether there were any regulatory failings linked to allegations against the Adani Group, following a bombshell report by a US short seller.
- The country’s highest court instructed the six-member panel to investigate “regulatory failure in dealing with the alleged violation of securities laws in relation to the Adani Group,” the court order said on Thursday.
- Billionaire entrepreneur Gautam Adani, whose family runs the ports-to-energy conglomerate, said he welcomed the Supreme Court’s order.
Adani Group signage at the Adani Defense and Aerospace stand during Aero India 2023 at Air Force Station Yelahanka in Bengaluru, India, Monday, February 13, 2023.
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India’s Supreme Court has set up an independent panel to investigate whether there were regulatory failures linked to allegations against the Adani Group, following a bombshell report by a US short seller.
The country’s highest court instructed a six-member panel to investigate “regulatory failure in dealing with the alleged violation of laws relating to the securities market in relation to the Adani Group,” a court order said on Thursday.
The committee will also provide an “overall assessment of the situation, including the relevant causal factors that have led to the recent volatility in the securities market,” the court order added.
In addition, the panel will propose measures to strengthen the regulatory framework and “ensure compliance with the existing framework for the protection of investors”.
India’s Supreme Court case comes just over a month after Hindenburg Research released a lengthy report on January 24 accusing the Adani Group of stock manipulation and fraud. In a 400-page rebuttal, the group denied any wrongdoing.
The debacle led to a massive selloff in the group’s shares and has wiped out roughly $140 billion in market value from the seven largest publicly traded companies under the conglomerate.
The panel will be chaired by Justice Sapre, a retired Supreme Court judge. The other members of the committee include OP Bhatt, KV Kamath, Nandan Nilekani and Somsekhar Sundaresan and retired judge JP Devdhar.
The Supreme Court has also instructed the country’s market regulator, the Securities and Exchange Board of India, to investigate “whether there was any manipulation of stock prices in violation of existing laws,” the court order says.
“SEBI shall expeditiously conclude its investigation within two months and submit a status report,” it added.
India’s top court said the directive was prompted by “the loss of investor wealth in the securities market in recent weeks due to a sharp decline in the share price of the Adani Group of companies,” and a need to protect Indian investors from the market. volatility.
These petitions included requests to investigate issues of “public money” being “exposed because public institutions such as the State Bank of India and the Life Insurance Corporation of India are exposed to the Adani Group,” the court order said.
Both institutions recently told CNBC that their exposure to the Adani Group was manageable.
In a recent blog, Aswath Damodaran, a finance professor at New York University’s Stern School of Business, argued that the Adani Group has exploited the “weakest links” in India’s institutions to its advantage. He also said that the Adani case provides an opportunity for Indian institutions to learn lessons and try to fix the problems.
“As for the institutions involved, which include banks, regulators and the (Life Insurance Corporation), I have learned not to attribute to venality or corruption what can be attributed to inertia and indifference,” the economist said on his blog.
“A more nuanced version of the Adani story is that the family group has exploited the seams and the weakest links in India’s history to its advantage,” he said, adding that “there are lessons for the nation as a whole, as it stands. they hope will be the decade of growth.”
Billionaire entrepreneur Gautam Adani, whose family runs the ports-to-energy conglomerate, said he welcomed the Supreme Court’s order.
“The Adani Group welcomes the order of the Hon’ble Supreme Court,” Adani wrote on Twitter on Thursday. “It will bring finality in a timed manner. Truth will prevail.”
The mogul’s rapid fall has sparked renewed scrutiny of his close ties with Indian Prime Minister Narendra Modi.
Last month, billionaire investor George Soros claimed that the Adani turmoil will weaken Modi’s grip on power and lead to a “democratic revival” in the country.
Soros’ criticism focused specifically on the cozy relationship between Modi and Adani. Both men come from India’s western state of Gujarat. Adani was an early supporter of Modi’s political ambitions and championed the Indian leader’s growth vision for the country.
“Modi and business tycoon Adani are close allies; their destinies are intertwined. Adani Enterprises tried to raise funds in the stock market, but he failed,” Soros said.
“Adani is accused of stock manipulation and its stock collapsed like a house of cards. Modi is silent on the subject, but he will have to answer questions from foreign investors and in Parliament,” the investor added.